Diesel price hike: Govt faces strike, shutdown threats

The government today came under attack from all quarters over diesel price hike and the decision on LPG. Amritsar, Karnal and Kanpur witnessed protests while, bus union in Kolkata threatened to go on stirke.

Bus and minibus operators in West Bengal on Friday threatened to go on an indefinite strike if fares were not immediately raised.

"How will we run buses if we don't have the money? With an increase of Rs. 5 per litre, it is next to impossible for us to run buses under this current fare structure. The fares have to be increased," said Aboshesh Da of a minibus union.

Women activists of Maharashtra Navnirman Sena (MNS) on Friday served black tea made on "chullha" (earthen stove) fire to protest the price hike in LPG cylinder and diesel effected by the government.

A spokesman of MNS said the protest was staged to express hardships being faced by the common man and women who bear the brunt of increased cost of cooking gas cylinder while managing kitchen.

The BJP and Shiv Sena activists also staged demonstrations in various parts of the city on the issue.

Key UPA ally and Trinamool Congress chief Mamata Banerjee too on Thursday night said that she was unhappy and astonished at the diesel price hike and the decision on LPG and demanded immediate rollback.

"We are unhappy and astonished that inspite of the formation of the UPA Govt hikes diesel price by Rs. 5, Mamata calls for rollback coordination committee after a long time, such a decision was taken without consulting us," the West Bengal chief minister, said.

"The price of diesel has been increased by Rs. 5 without any discussion.

Describing the hike in diesel prices as a cruel joke and 'mortal blow' on the common man and farmers, BJP on Thursday accused the government of conspiring with petrol 'mafia' and said it will not allow the hike and take to the streets instead. "This is a cruel joke on the common man in the country. It has hit farmers hard during the peak paddy sowing season. We will not allow this hike. We will not allow this government to loot the common man like this," BJP vice president Mukhtar Abbas Naqvi said.

"The way this government is increasing prices of petrol, diesel and LPG despite a reduction in international crude prices, it is a clear-cut case of a conspiracy with the petroleum mafia," Naqvi said.

BJP leader Yashwant Sinha said the hike will have a cascading effect on prices and will contribute further to inflation.

"It is a mortal blow of Rs. 5 increase in diesel price and will cause hardship. Had it been raised in small amounts it would not have been that objectionable or difficult. Diesel increase will have a cascading effect on the economy as a whole. Prices are already not under control, so this is going to contribute to overall inflation and create mayhem in the economy," Sinha sai

Defending the decision Congress party general secretary Digvijay Singh said, the government has to take a conscious decision after taking all allies of the UPA into confidence.

"We are not in favour of a hike in diesel prices to such an extent because it hurts the farmers and common man," he said.

He added that this should be discussed in the UPA Coordination Committee.

The fallout:

Trinamool Congress is set to lead a street rally in Kolkata on Saturday demanding their rollback.

BSP chief Mayawati criticised the UPA government for increasing diesel price and restricting supply of subsidised cooking gas and demanded immediate roll back of the "anti-people decision"."Reeling under the pressure of continued price hike of petrol, the common man has been further subjected to more hardships with this decision of unprecedented diesel price hike of Rs five per litre as well as quota of six LPG gas cylinders per family," Mayawati said in a statement.

RJD supremo Lalu Prasad said the UPA's government's decision was "unfortunate" and sought its reconsideration. Asking the Centre to reconsider the decision, Prasad said, the fuel price hike would have direct impact on the input cost of farmers besides on price rise and inflation.

Key UPA ally DMKdescribed the diesel price hike as 'very high' and unexpected and sought a roll back of the measure. Party chief M Karunanidhi said the hike would further affect the poor and the salaried class who are already reeling under high prices of essential commodities.

West Bengal Left Frontchairman Biman Bose condemned the union government's decision to hike diesel prices, saying such "anti-people" decisions will have a "disastrous impact" on the daily life of the masses. "The common people is currently reeling under the pressure of price rise of essentials. This decision of increasing the price rise of diesel by Rs.5 will have a disastrous impact on their daily life," said Bose in a statement.

A social activist from the fight against corruption group holds a LPG cylinder during protest against rise in fuel prices in Ahmedabad. Reuters/Amit Dave

Punjab chief minister Parkash Singh Badalcriticised the Centre for the "unwarranted and steep" increase in price of diesel and demanded an immediate and complete withdrawal of this hike. In a statement , Badal said the hike of Rs.5 in price of diesel was absolutely "unrealistic and arbitrary."

CPI(M) led OppositionLeft Democratic Frontin Kerala called for a state-wide hartal against the diesel price increase on September 15.

Samajwadi Party announced that it would hold a sit-in against the move across the state. "The move to hike diesel price is anti-people and will increase prices. Samajwadi Party opposes the move and will hold sit-in across the state to protest the hike," SP spokesman Rajendra Chaudhary said.

The NCP has demanded a rollback saying the change will further burden on the common man. "The Centre should consider rollback in diesel price and should not put a cap on subsidised LPG especially given the high price of essential goods thereby affecting the common man," NCP spokesperson Nawab Malik said.The CPItermed as "disastrous" the decision to hike diesel prices by Rs five per litre and restrict supply of subsidised cooking gas to six cylinders per household in a year. "It is a disastrous decision. It will increase the cost of production. The diesel price hike by Rs five per litre is unprecedented while the decision on limiting supply of subsidised cooking gas to six cylinders per household in a year is unacceptable. We shall oppose it tooth and nail," CPI MP Gurudas Dasgupta said.

Planning Commission, strongly backing the decision to hike diesel price and cap on supply of subsidised LPG said the country needs lot of tough decisions and diesel and petrol prices should be deregulated in phases to cut down deficit.Confederation of India Industries (CII) welcomed government's decision to increase diesel price. "The decision of the government to hike diesel prices and LPG (beyond six cylinders) are borne out of necessity. CII fully understands the economic compulsions for such a decision," CII Director General Chandrajit Banerjee said in a statement.

PMEAC and economists welcomed the fuel price hike decision by the government and said the decision provides room for Reserve Bank to ease monetary policy to give thrust on growth. The hike in diesel price will bring down burden on fiscal deficit even as it will put pressure on inflation. Inflation is expected to go up at least 0.4% as diesel price hike will have cascading effect, they said.

The automobile industry welcomed the diesel price hike, saying it is a much-awaited decision. Auto-makers, however, added that the hike has come at a wrong time for the overall economy.

"It is a good decision but the Rs. 5 per litre hike will hurt the consumer and market. We have been saying that diesel prices should be corrected in a staggered manner," Society of Indian Automobile Manufacturers (SIAM) Senior Director Sugato Sen said.

The decision to limit the sale of subsidised liquefied petrol gas (LPG) will hit the monthly kitchen budget of households, as every seventh LPG cylinder in a year is now likely to cost Rs. 743, nearly double the subsidised price of Rs. 399.

For the remaining six months of the current fiscal (October 2012 to March 2013), each consumer will be entitled to a maximum of three cylinders at cheaper rate. “The market rate of LPG cylinders at non-subsidised rates will be notified by oil marketing companies on a monthly basis,” a petroleum ministry statement said.

The government also removed the subsidy on branded diesel, which will now be sold at market rates. It, however, left kerosene prices unchanged, and spared an increase in petrol price by cutting excise duty by Rs. 5.50 a litre.

The government had last increased diesel prices in June 2011 and high international crude oil prices had forced oil companies to sell fuel at prices much below cost. The government bears a part of this cost by handing out cash payouts to state-owned oil companies.

High subsidies, however, have widened its fiscal deficit — shorthand for the amount of money that government borrows to fund its expenses — limiting its elbow room to spend on infrastructure and development schemes to spin jobs and multiply income.

Department of Economic Affairs Secretary Arvind Mayaram said the hike in diesel prices was a “difficult but necessary decision”.

Expectedly, the decisions, taken at a Cabinet Committee of Political Affairs (CCPA) meeting chaired by Prime Minister Manmohan Singh, triggered howls of protest from the UPA government’s key allies and political rivals. Key UPA ally, the Trinamool Congress said it was not consulted and was “shocked” by the decision to hike prices.

“We can tolerate anything but not the burden on common man. This is not acceptable to us,” said party chief and West Bengal chief minister Mamata Banerjee.

Principal opposition party Bharatiya Janata Party (BJP) also condemned the government’s decision. The CPI(M) said the price hike was a result of the anti-people policies being pursued by the UPA government.